With the ever-increasing need to find new revenue streams, the Facilities Management (FM) category has become ever more appealing enabling dealers to maintain margins and provide a more comprehensive offering to customers.
The need for diversification
The decline in traditional OP led Banner Business Services (BBS) – part of the office2office group – to re-evaluate its offering and look for alternative sources of income to benefit both its own business and its customers.
Seizing a gap in the market, Banner introduced Closed Loop, a secure volume-based document destruction service. The innovative concept is deceptively simple: Banner takes a customer’s confidential waste paper, securely destroys either on-site or off-site, bales the paper, segregates it, passes it to the mill and gives it back to the customer as recycled copy paper. Not only is Closed Loop an environmentally friendly solution, but also an effective solution for the secure destruction of confidential documents. “It’s a USP for Banner that also creates three separate revenue streams for us,” says BBS Managing Director Richard Costin.
The success of Closed Loop led Banner to realise that there were pieces missing in terms of document life solutions, resulting in the company offering record management services to customers. Partnering with South African company Document Warehouse, revenue is charged for storage and collection and at the end of the document life, charges can be levied for document destruction and waste value.
Branching out into the FM world
With the success of its document solutions divisions coupled with the continued decline of traditional OP sales, Banner kept a close eye on industry developments. The company identified facilities management supplies as a potential addition and researched the category thoroughly. Costin admits that determining which product segments to focus on from the vast array available within the sector was challenging. “After market research, we realised that products such as high-vis jackets didn’t really suit us so we have been selective in what we offer,” he says.
Being selective has nevertheless yielded a category sector which, from June this year, now offers customers a choice of over 14,000 products, covering everything from catering and front of house to washroom and premises management. Costin says the decision to enter the FM market was not taken lightly, but in the face of industry developments, market trends and the introduction of FM products into many customers’ businesses, it became ‘a no-brainer’.
The company itself stocks around 300 FM items which, says Costin, makes sense as they are fast moving and allows Banner to be more competitive on price. The rest of the products are sourced from partners with next-day delivery using its own logistics fleet of around 220 Truline branded vehicles across the UK and Ireland. Costin believes this puts Banner in a unique position. Priding itself on offering customers a ‘one supply chain’ business model, the Banner strategy for FM going forward is to become the go-to provider of supplies and services for the workplace, enabled by its sophisticated source, supply and distribute infrastructure.
It hasn’t all been plain sailing. Facilities management is a substantial category that required considerable time and expense in staff training, according to Costin. Banner entered the FM market cautiously, starting with furniture in January followed by catering products such as the ubiquitous tea and coffee as well as disposable cutlery and plates in May.
“Following the first day of catering training, an account manager took an order; he would never have dreamt of selling cutlery to a customer before,” reveals Costin.
With orders flowing in from the launch of the FM product category online, Costin firmly believes that as long as the company continues to add the right products, both the company and its customers will continue to grow. “Moreover, the margins are healthier in FM categories such as catering than they are for general office products,” he adds.
Banner isn’t trying to muscle in on traditional FM contractors, recognising where its limitations lie. The company, for example, would not pitch for a large corporate FM contract. “We wouldn’t tender for that type of contract as there are specialists in that market,” says Costin. Instead, Banner is focusing on supplying FM products to existing customers, using online ordering – where 80% of its orders originate – which makes it simple to add FM products to a sale. “This way, customers can deal with one supplier, one account manager, one delivery and one complete supply chain. It’s just so much easier,” concludes Costin.